Google-Justice Department showdown over Yahoo averted with only 3 hours to go

Google withdrew its proposed advertising partnership with Yahoo last month only three hours before the Justice Department planned to file a lawsuit to block the deal.

That’s how close Google came to labeled a monopoly by federal regulators, who concluded that a partnership between the No. 1 and No. 2 search engines – which control 90 percent of U.S. search advertising – would harm competition.

The revelation came in an article published Tuesday in American Lawyer Daily, which interviewed Sanford Litvack, an attorny brought on by the government from private practice for the case and who would have been lead counsel in court.

“We were going to file the complaint at a certain time during the day,” Litvack said in the article. “We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement.”

According to the article, the government’s complaint would have charged that the agreement violated Sections 1 and 2 of the Sherman Act. Section 1 bans agreements that restrain trade unreasonably. Section 2 makes it unlawful for a company to monopolize or attempt to monopolize trade, the magazine said.

Pulling out of the deal was a blow to Google, which insisted that the partnership was good for competition, but that “pressing ahead risked not only a protracted legal battle, but also damage to relationships with valued partners.” Yahoo, which had touted the deal as a solution to staying independent following a takeover battle with Microsoft, said it was willing to fight the government in court.

Microsoft lobbied intensely against the deal, but Litvack said that it had no bearing on the outcome. He also voiced regrets that the high-profile case didn’t go to court.